# WA: Take that smoking ban -- El Gaucho Re-Opens Cigar Lounge



## Ducrider (Feb 4, 2010)

Tacoma cigar bar back in business, despite state smoking ban | KOMO News - Breaking News, Sports, Traffic and Weather - Seattle, Washington | News



> To stay within guidelines, the lounge is operated by owners of a newly created company -- not employees and it isn't open to the public.


Took a creative work around, but it appears to be passing. Hopefully this will come to El Gaucho Seattle, which is about two blocks from my office.


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## pomorider (Nov 14, 2009)

I am glad to see that his business venture is going to be paid off! Very creative.


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## cubicdissection (Jan 10, 2010)

Good for him finding a way around it...hope it holds.

It's disgusting how far he had to go to use his property for a lawful endeavor. Shit is getting out of hand in this country :frown:


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## Magnate (Nov 27, 2009)

I'm am very glad to see a private business with a workaround. Love it.

On the other hand, bring your wallet: http://www.elgaucho.com/elgaucho/images/menus_seattle/cigar.pdf


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## Mante (Dec 25, 2009)

Nice! Very Nice! Never underestimate the ingenuity of small business. We can teach the big boys that this is where they came from on occasion. LMAO. Yay!


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## Mante (Dec 25, 2009)

Magnate said:


> I'm am very glad to see a private business with a workaround. Love it.
> 
> *On the other hand, bring your wallet: *
> 
> Holy Carp! The VSG's are cheaper here!


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## Magnate (Nov 27, 2009)

Tashaz said:


> Magnate said:
> 
> 
> > Holy Carp! The VSG's are cheaper here!
> ...


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## Ducrider (Feb 4, 2010)

Magnate said:


> I'm am very glad to see a private business with a workaround. Love it.
> 
> On the other hand, bring your wallet: http://www.elgaucho.com/elgaucho/images/menus_seattle/cigar.pdf


Yikes - I'm willing to pay a little more markup for a local B&M - but thats like restaurant markup on liquor and wine! But, if its setup like a club where you can store some cigars there, that would be nice.

I found some other information saying that the Attorney General's office is looking at his setup and planning to meet with him to discuss. So -- its still up in the air if he's going to get this through. If the state says no, I would think he has enough invested at this point to pursue it through the legal process. We'll see. Maybe a positive outcome will come out of this.


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## Magnate (Nov 27, 2009)

I understand it cost him $15k. And, it's probably saving him significant money on employee taxes by using a subcontractor - that he probably owns part of... 

I doubt much money actually went into this process when you consider asset value and tax savings. 

But I read RCW's myself all the time. Literally once every other day I'm in the RCW's (or federal register)... I've read the law for WA State... and he's beat it with one possible exception. 

There are a few rules that tie together the ban... one is that employees can not be required to work within 25 of smoking... So, he got around it by using an LLC with members and no employees. If they are providing services for the LLC, they will need to pay themselves some amount of W2 income to avoid scrutiny by the IRS. If they receive W2 income, they are also employees of the LLC... could be a problem there. 

We'll see how it shakes out, but I'm rooting for him!!


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## Ducrider (Feb 4, 2010)

I'm not a tax lawyer, but if taxed as a partnership (the default rule), members of an LLC are grnerally not viewed by the IRS as employees. Members get profits and losses "passed through" and reported on a k-1, rather than wages on a w-2. There are exceptions, of course, such as if the llc elects to be taxed as an s-corp, but that is the general rule. That said, I haven't read the smoking ban law, but hopefully this distiction holds, together with the 25 ft airlock.


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## Magnate (Nov 27, 2009)

Ducrider said:


> I'm not a tax lawyer, but if taxed as a partnership (the default rule), members of an LLC are grnerally not viewed by the IRS as employees. Members get profits and losses "passed through" and reported on a k-1, rather than wages on a w-2. There are exceptions, of course, such as if the llc elects to be taxed as an s-corp, but that is the general rule. That said, I haven't read the smoking ban law, but hopefully this distiction holds, together with the 25 ft airlock.


It's the statutory employee rule they have to worry about. And if they get around that, then they are using the "Self-employed" argument... if you are self employed, are you not employed?

And, sadly, you and I know where we live.

Believe me, I'm on their side... I'm just pointing to the battlefield where the fight will be fought. :fencing:


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## Ducrider (Feb 4, 2010)

Magnate said:


> if you are self employed, are you not employed?


Indeed - self-employed, but not an employee of the business. I think thats the distinction they are trying to grab on to . You and I can start "Washington's Smoking Ban Sucks, LLC," own it 50/50, and each dedicate 100% of our time to the business, and neither of us will get W2 wages because we aren't employees. We are members who own the business. We would be taxed on profits whether we take distributions or not, and if we "paid" ourselves a weekly "wage," its still just distributions, not wages.

Isn't splitting legal hairs fun? :mischief:

And to think -- all this is necessary to allow consenting adults the right to go to a cigar lounge and relax for a few hours with a cocktail and a cigar. Ridiculous.


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## Magnate (Nov 27, 2009)

Ducrider said:


> Isn't splitting legal hairs fun? :mischief:
> 
> And to think -- all this is necessary to allow consenting adults the right to go to a cigar lounge and relax for a few hours with a cocktail and a cigar. Ridiculous.


If you're filing as a partnership, that's true... and I didn't think of it as a partnership, I thought of it as S-elected.

But your last statement is the most true.


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## rick (Sep 23, 2009)

Magnate said:


> I'm am very glad to see a private business with a workaround. Love it.
> 
> On the other hand, bring your wallet: QUOTE]
> 
> $28 for that Monte? really?!?


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## Magnate (Nov 27, 2009)

rick said:


> Magnate said:
> 
> 
> > I'm am very glad to see a private business with a workaround. Love it.
> ...


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